Program Compliance Review Overview IFTA Annual Business Meeting Las Vegas, Nevada July 21-22, 2006 Presented by Dick Beckner Debora Meise Jay Starling

2 Terms: Administrator A Program Compliance Administrator employed by IFTA, Inc. Committee The Program Compliance Review Committee Director A Program Director employed by IFTA, Inc. Follow-up The process of obtaining verification of compliance from a jurisdiction. Panel A Program Compliance Review Panel Reassessment Reassessment and reexamination of a jurisdiction to ensure compliance following a Finding of Non-Compliance in a Program Compliance Review Team The Program Compliance Review Team

3 Information Gathering Preliminary Approximately ninety (90) days prior to a Review, the Administrator will contact the Jurisdiction requesting information in order to conduct the Preliminary Administrative Review. Upon receipt of the information from the Jurisdiction, a sample of licensee files and a sample of audits is selected, which will be the basis for the on-site Review.

4 Information Gathering Preliminary Prior to the Review, the Administrator should be able to complete a preliminary administrative review of the following Review Topics and subtopics: LICENSE APPLICATION CONTENTS LICENSE CONTENT AND DESIGN DECAL CONTENT AND DESIGN (SPECIFICATIONS) TEMPORARY DECAL PERMITS INFORMATION PROVIDED TO IFTA LICENSEES BONDING PROCEDURES TAX REPORT FORM CONTENT AND PROCESSING BASE JURISDICTION ACCOUNTING PRIOR REVIEW FOR UPDATES/CHANGES

5 On Site - Day One Opening Conference Preliminary findings are reviewed Overview of the PCR Process Begin Reviewing: Licensee information Sample of tax returns Tracking of the tax returns through the transmittal process Audit files (including tracking through the transmittal process)

6 On Site - Day Two Continue tracking the tax returns through the transmittal process. Continue the audit review.

7 On Site - Day Three Finish up all fieldwork Closing Conference Discuss findings What happens after the team goes home

8 Report Process Administrator prepares a Draft Final Report and submits it to the Team for comment within approx. ten (10) days of completion of the Review. Team responds in writing to the Administrator within ten (10) days of receipt of the Draft Final Report. Team must respond in writing to the Administrator with any comments/suggestions/recommendations within ten (10) days of receipt of the Report.

9 Report Process continued Jurisdiction will have the Draft Final Report within days of the review for comment. Jurisdictions has 30 days to make comments/corrections to the Report Documentation should include corrective actions taken since the on site review.

10 Report Process continued Administrator will compile the responses into the Report and submit the report and any attachments provided by the jurisdiction for the non compliance issues to the Director. The Director will forward the Report to the Panel. The Report to the Panel will contain copies of all information the Panel needs to complete its review.

11 Program Compliance Review Committee Panel Responsibility The Panel will review the Report If the Panel makes a Finding of Compliance, a written Finding will be drafted by the Panel and sent to the Chair of the Program Compliance Review Committee.

12 Program Compliance Review Committee Panel Responsibility continued If the Panel makes a Finding of Non- Compliance based on its review, a written Finding will be drafted by the Panel, and such finding, along with a written recommendation for Reassessment and/or Follow Up, will be sent to the Chair. The Chair will forward the Finding to the Director.

13 REASSESSMENT AND FOLLOW UP PROCESS Follow-up If the findings include a recommendation for Follow Up, the Director will work with the Jurisdiction to obtain verification of compliance by the issuance of a Proposed Compliance Plan. Upon receipt of the Follow Up documentation from the Jurisdiction, the Director will review it. If the documentation proves that the Jurisdiction is now in compliance, the Director will issue the Final Report.

14 REASSESSMENT AND FOLLOW UP PROCESS Follow-up continued If the Director determines that the documentation does not prove compliance or if the Jurisdiction fails to provide the required documentation, the Director will notify the Chair to proceed with the Reassessment Process.

15 REASSESSMENT AND FOLLOW UP PROCESS Reassessment If the findings of the Panel include a recommendation for Reassessment, the recommendation is forwarded to the Chair and Vice Chair of the Committee. In order for the Reassessment to go forward, a majority of the five (the three Panel members, the Chair and the Vice Chair) must agree with the recommendation. Either the Chair or the Vice Chair must be part of the majority.

16 REASSESSMENT AND FOLLOW UP PROCESS Reassessment continued If the Reassessment goes forward, the Chair, the Vice Chair, the Committee members not serving on the Panel and the Director will develop a Reassessment plan and timeline. The date of compliance will depend entirely upon the area of non- compliance found.

17 REASSESSMENT AND FOLLOW UP PROCESS Reassessment continued Once the Reassessment plan and timeline have been developed, the Reassessment will proceed. The Director will contact the Jurisdiction and provide the Reassessment plan and timeline. The goal of the Reassessment is to bring the Jurisdiction into compliance and to issue a report of such compliance with the following year’s Program Compliance Review Final Reports.

18 REASSESSMENT AND FOLLOW UP PROCESS Reassessment continued Upon bringing its program into compliance, the IFTA Commissioner of the Subject will verify compliance in writing to the Director. If the Subject fails to bring its program into compliance as required by the Reassessment Plan, a report will be filed with the Committee chair by the Director.

19 REASSESSMENT AND FOLLOW UP PROCESS Reassessment continued Based on the report, two-thirds of the full Committee must determine whether to make a Final Determination Finding of Non- Compliance. If a Final Determination Finding of Non- Compliance is issued, it will be forwarded by the Director to the Jurisdiction in care of its IFTA Commissioner and to the head of the Jurisdiction agency through which the fuel use taxes are collected pursuant to the IFTA, and to the Governor or Premier of the Jurisdiction.

20 REASSESSMENT AND FOLLOW UP PROCESS Reassessment continued Following the issuance of a Final Determination Finding of Non- Compliance, the Committee will refer the matter to the Dispute Resolution Committee for dispute resolution enforcement proceedings within sixty (60) days of the issuance of such Finding. Such dispute resolution enforcement proceedings shall be initiated in the manner prescribed by the IFTA Dispute Resolution Process.